The BBC has been told to up the standard of its online local news and look to mine more personal data from users of its website network, but otherwise its web services have been given the seal approval by in a review by the BBC Trust.

On Monday, the BBC Trust published its second service review of BBC Online and the interactive red button service – last reviewed in 2008 and 2010 respectively – which spans 10 products including internet news and sport coverage and the BBC iPlayer video catch-up service.

A largely clean bill of health for BBC Online, which reaches 22 million people each week, was marred by the criticism that its online local news, considered the "most important product in the BBC Online portfolio", is not as good as coverage of UK and international news.

"One area for improvement is the provision of local content, particularly local news," the BBC Trust said in its 101-page report. "[The] BBC Online's local offer is not as strong as its UK and international news."

The report found that local news stories are "not updated frequently" and news coverage "is not particularly comprehensive in most localities".

"In addition, BBC local sites are organised around regions or counties, which are perceived as being too large to be locally relevant," the trust found.

However, the BBC could find significant resistance to a major ramping up of its local content strategy from regional and local newspapers.

The trust said at the time that the network of more than 60 websites would "not improve services for the public enough to justify either the investment of licence fee funds or the negative impact on commercial media".

Earlier this year, Ofcom began awarding licences for the network of local TV stations across the UK, which aim to tap into local advertisers.

The BBC Trust also said on Monday that the corporation's management should improve its local content "alongside broader actions to improve navigation and personalisation".

"The [BBC] executive should consider how to improve navigation across the different parts of BBC Online, with improved links and consistency of design, as well as an improved internal search facility, to ensure users get the most out of every visit," the BBC Trust concluded. "Many users want to be able to personalise the site according to their own preferences, and the BBC should explore ways to make this possible, while always safeguarding people's personal information."

Safeguards recommended by the trust include "full transparency" of what data the BBC holds on an a user, and the benefits this will bring, as well as the BBC always providing an "editorial voice" when providing or recommending content.

"There should be no commercial imperative behind the BBC's personalisation plans, and any commercial use of the data by the BBC should be at the user's explicit dicscretion," the BBC Trust warned.

The corporation's regulatory and governance body also said the online operation has undergone "substantial change" since its last relatively critical 2008 review and has made "good progress in rationalising its offer and improving its management and operations".

The latest review concluded that BBC Online now has a "good level of financial accountability", although for more transparency the corporation has been told to drop the definition of "cost-per-user reached" to actual "people reach".

An analysis showed BBC Online spent £103m versus a budget of £109m in the year ended 31 March 2013, a 5.6% underspend.

In 2010, BBC Online was hit with a 25% budget cut, part of ex-director general Mark Thompson's Delivering Quality First cost-cutting package, and told to reduce the number of websites it operates from 400 to about 200.

Monday's report shows a breakdown of where cuts have fallen as the budget has been slashed from £125.8m to £103m.

The most popular area of news, sport and weather has taken almost the biggest hit – from a budget of £49.2m to £43.9m from 2010 to 2013, an 11% fall and 23% of the £22.8m total savings made across all BBC Online cuts.

Knowledge & Learning, which contains a great deal of educational content and is to be relaunched this year, was the biggest casualty with a 25% budget cut from £24.9m to £18.7m across the period. It accounted for 27% of the total BBC Online budget savings for the three-year period.

TV & iPlayer took a 24% budget cut, from £16.1m to £12.2m, about 17% of total savings; Audio & Music fell 14% from £15.5m to £13.3m, worth 10% of all savings.

"Website users told us they value BBC Online and trust its news and sport above any other online provider," said BBC Trustee Suzanna Taverne. "However, people also raised some areas where they would like to see improvement – such as the search and navigability functions, and the local news sites … that will help the [BBC] online offer to remain the 'go-to' website for millions of users each day."

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